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No. of Recommendations: 7

http://sageonline.com/transcript.asp?id=14319&ps=1&s=8


What is scary is that Nadine Wong is actually one of the better analysts:

"SageCalc: With over $16 a share in cash, what are your thoughts on Celera Genomics Group [CRA], even though it may have a high cash burn rate?

One thing about Celera is that it's one of those hot stocks because it was really into genomics and mapping and sequencing the human genome. And since that project has been done, I get the feeling now that Celera is kind of lost, unfocused. That's how I would describe that company. How are they going to top what they did in the past? I think they're floundering right now. I think, for the short term, it's one of the companies you just watch to see what they'll do. I'm just not really too keen on the company."

I would have answered the question as follows:

Actually the companies burn rate is not especialy high. In principle the $1-billion-plus of cash they have will last a very long time if they just continue sequencing and annotating genomes. Dr. Venter and Tony White have both indicated that Celera may make strategic acquisitions this year and begin a drug development busines, possibly cancer vaccines. But, the various statements comming from Celera and its parent Applera have been so sketchy and disjointed that I have no confidence in them. This reinforces my general analysis of the Applera-ABI-CRA group nas internally incompatable. I just do not see it continuing indefinitely as it is, much less joining an instrument maker with a drug company. By the way, I see no advantages and several disadvantages in the concept of CRA as a drug company. They would be a late commer to a crowded field and, in spite of popul;ar opinion, their database gives them little advantage (especially while they will sell the date to anyone who wants it). The short-term business problem faced Applera is a great slow-don in the corporations primary business selling and mataining hardware. This was reflects in the recent fall of ABI's stock price. The problem for CRA is that part of their cash will undobtedly be spent over the next year to buy goods and services from ABI. They have always done this, but I'm sure the pressure is on at CRA to buy everything from ABI that is justifiable under the current conditions. I would expect CRA to come out of this year with fully upgraded and throughly serviced ABI products. So, the longer that the status quo is maintained, the more of the CRA cash will be drained away to ABI or other vendors. This will only stop when CRA's business becomes profitable. My expectation is that at some point Applera will want to spin-off CRA and keept the cash in house compensating the CRA-stock holder with ABI stock. The fall in ABI stock prices really undermined this idea. These comments are, of course, just my speculation. But, I see no compelling reason to invest in this company's stock and I see lots of undertainties. On the other hand, the Venter-magic and Celera mistique are still active and I would expect the comapny to react fast upon a general biotech upturn. Thus, it might be a good speculative stock to play if you are betting on a biotech upturn.



"SageCalc: Which companies are leading in proteomic studies?
Right now I would say Myriad Genetics, Inc. [MYGN]. There are two makers out there: a company like Ciphergen Biosystems [CIPH], and there's Large Scale Biology Corporation [LSBC] and ACLARA BioSciences, Inc. [ACLA]. Those are probably some of the bigger name players."


I would have answered the question as follows:

Actually, Incyte Genomics has the most comprehensive set of gene transcripts. The gene transcripts are representative of the proteins that the cells can make. Thus, Incyte Genomics is the leader in the poorly defined world of proteomics. Their acquisition last year of Proteome, Inc. confirms this leadership position.

If you believe that youactully have to have the protein in hand to be in the proteome business then, Large Scale Biology Corporation (LSBC) has probably isolate more proteins that anyone else and they have a system for quickly making commercial scale lots of other proteins, but they do not know much about the functionality of the proteins.

Dyax Corporation (DYAX) gas patented phage display technology which allows the rapid identiication of protein binding sites. This technology has been licsensed to about 50 major companies with the potential for royalties as well as fees on discoveries. Thus, in some ways, DYAX has a business model thatcould be similar to INCY's.

If you want to make protein drugs, you have your choice of plants (LSBC), mice, pigs, goats (GZTC), cows (PPL), or chickens (several private companies, see GERN).

Of course, antibodies are a subset of protein that are especially attractive as drugs. ABGX, MEDX, and PDLI are active in this field.

There are companies that want ot improve on the proteins that nature has provided including DVSA, MAXY, AMEV and PRCS.

Of course we could also talk about companies that are determining the
3-D structure of proteins. Although tis is elegant research and has led to great understanding of protein function, it may not have great commercial utility unless the efforts to automate it succeed. Even then, we may be able to find drugs faster by parallel screening than by rational design.

Of course, proteins may turn out to ne unnecessary. ISIP, GNTA, RZYM, Valigen. et al. may yet prove that we can target mRNA rather than proteins. If this works then the entire biotech/pharmaceutical industry might be restructured. Of course, SGMO is reaching even earlier in the DNA-mRNA-protein chain by trying to control DNA transcription factors (which are proteins themselves).

I may have gone further than you though necessary, but proteomics is a broad concept.

NOTE: INCYLONG holds shares in most of the companies mentioned in this section.






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